Job growth tumbles in December; employers add just 74,000 to payrolls

January 10, 2014|By Don Lee | This post has been corrected. See the note below for details.

A sign in a window at a New York City retail store advertises for a job opening… (Spencer Platt / Getty Images )

WASHINGTON -- U.S. employers added a measly 74,000 new jobs last month, the government said Friday. That was the lowest jobs number in about three years and a major disappointment after a recent string of positive economic signs pointed to stronger growth.

The weak hiring confounded most analysts’ expectations for job growth of about 200,000, which was the monthly average of the prior three months. The construction sector, rather than resurging as some had predicted, shed a large 19,000 jobs to close out the year, although Labor Department officials said bad weather in parts of the country may have affected the payroll count.

Even as job growth was anemic, Labor Department officials reported that the nation’s unemployment rate fell to a new five-year low of 6.7% last month, from 7% in November.

However, the unusually large drop was for the wrong reason: Rather than more people entering the job market because of increasing confidence, there was a big drop of 347,000 in the labor force.

The so-called labor participation rate -- the share of working-age people with jobs or looking for work -- fell to 62.8% last month, from 63%, matching the level of two months ago that was the lowest since February 1978.

The latest jobs report somewhat muddles the economic picture, which had brightened considerably in recent weeks amid reports of strengthening exports, homebuilding and consumer spending. The economy gained speed in the second half of last year, and many experts had raised their growth forecast for this year, including those at the Federal Reserve, which last month pulled back a bit on its economic stimulus efforts because of the better performance and outlook.

The lackluster job growth in December came despite robust hiring by retailers, which added 55,300 jobs, and temporary-help firms, which bulked up payrolls by 40,400.

Other major industries lost jobs or had relatively little growth. The high-paying information industry saw its payrolls shrink by 12,000 last month. Manufacturing added 9,000, down from 31,000 new jobs in November. The public sector lost 13,000 jobs, with local, state and federal government all cutting back.

What’s more, workers on average put in fewer hours on the job in December. The average weekly hours of all private-sector employees edged down to 34.4, from 34.5 in November. Average hourly earnings increased by a skimpy 2 cents, to $24.17.

[For the Record, 6:29 a.m. PST Jan. 10: An earlier version of this post stated that the December unemployment report shows the lowest number of new jobs in about two years. It is the lowest number of jobs in about three years.]